The more you look at the data…..

….the more convincing seems to be the argument that financial and commodity markets have got way ahead of the recovery in the real economy.

Take a recent Credit Suisse report, for instance.

Its analysis of monthly apparent demand in China, up until June, for a few key commodities such as polyethylene (PE), asphalt, copper and iron ore show that they were above underlying real demand.

Are we about to be undone by what has undone is so often before, and as recently of course as Q4 last year?

By this I mean the banks and the speculators. Public money, used to bail out the banks, is being poured into oil and gas speculation, creating dangerous bubbles.

And to repeat yet again, there’s all the hot money deceiving us over China. In this case its through state-owned banks which have been instructed to attempt to compensate for the mess made by Western lenders.

China, and indeed the rest of Asia, is busy trying to remake much of its economy in order to be less reliant on export trade which saw unsustainable growth.

The problem for the average worker in the US and Europe is that salaries have been stagnating, or even declining, in inflation-adjusted terms due to the great drift of manufacturing east.

Combine this with the loss of perceived wealth caused by recent harmful financial “innovation” (I’d say that’s too flattering a word to use. How about manipulation or fraud now being paid for by the tax payer?), and real demand could take many years to recover to 2004-07 levels.

“All these rises in markets are said to reflect economic recovery but it is just another bubble,” Heiner Flassbeck, Unctad’s chief economist, told the Guardian. “These markets are reflecting a recovery that is not there. Wage deflation is a huge danger everywhere and this is not being recognised.

“Banks have been rescued by the taxpayer and are just returning to casino-style speculation that brought us trouble in the first place. We need to focus banking on supporting investment in productive businesses.”

This reminds me of a trip through rural Texas I made in March last year. No luxury condos, country-club memberships and multi-million dollar bonuses were evident there.